What credit scoring system do car loans use?
I'm a bit confused. I know there are different credit scoring systems. What do car loans use?
It can definitely be confusing, but hopefully, I can help. When you apply for a car loan, your credit history heavily influences whether or not you will be approved for a loan by a bank. If approved, your credit score is used to determine the interest rate attached to your loan.
The two major credit scoring systems are VantageScore and FICO. Use varies by lender.
VantageScore’s ratings look like this:
- Excellent: 781-850
- Good: 661-780
- Fair: 601-660
- Poor: 500-600
- Very Poor: 300-499
FICO’s ratings look like this:
- Exceptional: 800-850
- Very Good: 740-799
- Good: 670-739
- Fair: 580-669
- Poor: 300-579
As you can see, because there are different systems, what is considered good credit differs. But generally, 660 or higher is good and loan applicants with this score or higher shouldn’t have a problem securing financing.
As you continue to pay your bills and loans, your credit scores change. And because of this, your car loan can be adjusted to save money. This can be done through refinancing.
Refinancing allows you to re-do your loan agreement. You can refinance through the Jerry app. We’ll compare the options among top lenders, saving you the hassle and delivering the best deals directly to you in minutes. On average, people pay $85 less every month on their car loans after refinancing.
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